Week 1 Lecture 2 - Decision Making And Relevant Information Flashcards
Cost
A sacrificed or forgone resource to achieve a specific objective
Actual cost
A cost that has occured
Budgeted cost
A predicted cost
Cost object
Anything for which a cost measurement is desired
Cost accumulation
The collection of cost data in an organized way by means of an accounting system
Cost assignment
The allocation of costs to the activities or objected that triggered the incurrence of the costs.
1: tracing costs w a direct relationship to the cost object
2: allocating accumulated costs an indirect relationship to a cost object
Manufacturing costs =
Dm, dl, moh
Production costs.
Dm = direct material
Dl = direct layout
Moh = manufacturing overhead.
Non-manufacturing costs
All other costs incurred in the organization.
Direct costs
Can be traces to a cost object in a effective way
Indirect costs
Are related to a cost object but can’t be traced in an effective way.
Instead are allocated to a cost object in a rational an systematic manner.
Variable costs
A cost that changes in proportion to the change in output.
Fixed costs
Unchanged in relation to output. Change inversely with output.
(More output = lower cost per unit)
Sales - Vc =
Total CM
Total CM - fixed costs =
Profit
Sales - cogs =
Gross profit
